The Hindu Business Line : Madras Cements second quarter net zooms on cost control steps

CHENNAI: Madras Cements Ltd has posted a net profit of Rs 8.67 crore on sales of Rs 169.19 crore for the second quarter ended September 30, 2003 against a net profit of Rs 24 lakh on sales of Rs 158.17 crore for the same period last year.

For the first half of this year, the company posted a net profit of Rs 18.90 crore on sales of Rs 353.10 crore compared to a net profit of Rs 5.71 crore on sales of Rs 319.89 crore for the corresponding period last year.

Mr A.V. Dharmakrishnan, Senior Vice-President - Finance, told Business Line that the sustained efforts over the last two years to control costs - right from limestone excavation to distribution - had started yielding results now. "Even though there is no significant increase in realisation compared to previous years, the profit for the six months is one of the best in recent years," he said.

The company had been aggressively going for various cost control measures, including swapping high-cost debt with low cost funds. In the first six months of this year, it swapped Rs 100 crore of high cost funds and planned to swap another Rs 100 crore during the remaining part of the year.

In the second quarter of this year, interest charges were Rs 11.78 crore against Rs 15.81 crore for the same period last year while in the first half of the year interest was Rs 27.76 crore compared to Rs 33.58 crore for corresponding period in 2002-03.

Other income during the quarter under review was Rs 2.17 crore (Rs 2.06 crore) and provision for taxation at Rs 7 crore (Rs 85 lakh).

In the July-September 2003 period, it sold 9.73 lakh tonnes of cement against 9.64 lakh tonnes for the corresponding period last year while clinker sales were 0.18 lakh tonnes against 0.12 lakh tonnes previously. In the first half of this year, cement sales were 19.06 lakh tonnes (18.55 lakh tonnes) and clinker sales 0.77 lakh tonnes (0.26 lakh tonnes).

The equity shares of the company of Rs 100 each will be sub-divided into 10 shares of Rs 10 each, the record date for which is November 14. The board will meet again to approve and declare the first interim dividend, the record date for which has been fixed as December 19.

Mr Dharmakrishnan said the total cost of funds for the company worked out to 6.67 per cent. Madras Cements had about Rs 290 crore of long-term loans outstanding as on date, of which loans from banks and mutual funds amounted to Rs 65 crore carrying an average interest of 9.9 per cent; Rs 22 crore through fixed deposits with an interest of seven per cent; and Rs 204 crore of 11.5 per cent debentures. The company was going in for early redemption of these debentures, paying a premium to the debenture holders.

On the outlook, he said that demand had not picked up as expected and with the north-east monsoon having set in, the company would have to wait for the fourth quarter of the financial year to see if demand would pick up. Average realisation per tonne had gone up by Rs 50-60 in the first half of this year over last year.

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